#THE SPECIFIED BANK NOTES (CESSATION OF LIABILITIES) ACT, 2017
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##ARRANGEMENT OF SECTIONS 
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##SECTIONS

1. Short title and commencement. 
2. Definitions. 
3. Specified bank notes to cease to be liability of Reserve Bank or Central Government. 
4. Exchange of specified bank notes. 
5. Prohibition on holding transferring or  receiving specified bank notes. 
6. Penalty for contravention of section 4. 
7. Penalty for contravention of section 5. 
8. Offences by companies. 
9. Special provisions relating to offences. 
10. Protection of action taken in good faith. 
11. Power to make rules. 
12. Power to remove difficulties. 
13. Repeal and savings.


##THE SPECIFIED BANK NOTES (CESSATION OF LIABILITIES) ACT, 2017

##ACT NO. 2 OF 2017

[27th February, 2017.]

An Act to provide in the public interest for the cessation of liabilities on the specified bank 
notes and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:—

1. **Short title and commencement.**—(1) This  Act  may  be  called  the  Specified  Bank  Notes 
(Cessation of Liabilities) Act, 2017.

(2) It shall be deemed to have come into force on the 31st day of December, 2016.

2. **Definitions.**—(1) In this Act, unless the context otherwise requires,— 

(a) “appointed day” means the 31st day of December, 2016;

(b) “grace period” means the period to be specified by the Central Government, by notification, 
during which the specified bank notes can be deposited in accordance with this Act;

(c) “notification” means a notification published in the Official Gazette; 

(d)  “Reserve  Bank”  means  the  Reserve  Bank  of  India  constituted  by  the  Central  Government 
under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);

(e) “specified bank note” means a bank note of the denominational value of five hundred rupees 
or one thousand rupees of the series existing on or before the 8th day of November, 2016.

(2) The words and expressions used and not defined in this Act but defined in the Reserve Bank of 
India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949) shall have the meanings 
respectively assigned to them in those Acts.

3. **Specified bank notes to cease  to be liability of Reserve Bank or Central Government.**—On 
and  from  the  appointed  day,  notwithstanding  anything  contained  in  the  Reserve  Bank  of  India  Act,  1934         
(2 of 1934) or any other law for the time being in force, the specified bank notes which have ceased to be 
legal tender, in view of the notification of the Government of India in the Ministry of Finance, number S.O. 
3407(E), dated the 8th November, 2016, issued under sub-section (2) of section 26 of the Reserve Bank of 
India Act, 1934, shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the 
guarantee of the Central Government under sub-section (1) of section 26 of the said Act. 

4. **Exchange  of  specified  bank  notes.**—(1)  Notwithstanding anything  contained  in  section  3,  the 
following persons holding specified bank notes on or before the 8th day of November, 2016 shall be entitled 
to tender within the grace period with such declarations or statements, at such offices of the Reserve Bank or 
in such other manner as may be specified by it, namely:—

(i) a citizen of India who makes a declaration that he was outside India between the 9th November, 
2016 to 30th December, 2016, subject to such conditions as  may be specified, by  notification, by the 
Central Government; or 

(ii) such class of persons and for such reasons as may be specified by notification, by the 
Central Government.

(2) The Reserve Bank may, if satisfied, after making such verifications as it may consider necessary that the 
reasons for failure to deposit the notes within the period specified in the notification referred to in section 3, are 
genuine, credit the value of the notes in his Know Your Customer compliant bank account in such manner as 
may be specified by it. 

(3) Any person, aggrieved by the refusal of the Reserve Bank to credit the value of the notes under 
sub-section (2), may  make a representation to the Central Board of the Reserve Bank within fourteen 
days of the communication of such refusal to him.

Explanation.—For the purposes of this section, the expression “Know Your  Customer compliant bank 
account”  means  the  account  which  complies  with  the  conditions  specified  in  the  regulations  made  by  the 
Reserve Bank under the Banking Regulation Act, 1949 (10 of 1949).

5. **Prohibition  on  holding  transferring  or  receiving  specified  bank  notes.**—On  and  from  the 
appointed day, no person shall, knowingly or voluntarily, hold, transfer or receive any specified bank 
note: 

Provided that nothing contained in this section shall prohibit the holding of specified bank notes—  

(a) by any person— 
  (i) up to the expiry of the grace period; or 
  (ii) after the expiry of the grace period,— 
    (A) not more than ten notes in total, irrespective of the denomination; or 
    (B) not more than twenty-five notes for the purposes of study, research or numismatics;

(b) by the Reserve Bank or its agencies, or any other person authorised by the Reserve Bank;

(c) by any person on the direction of a court in relation to any case pending in the court.
(d) by  the  law  enforcement  agencies,  such  as  the  Central  Board  of  Direct  Taxes,  Central 
Board of Indirect Taxes and Enforcement Directorate on production of the documents authorising 
such seizure or confiscation, as the case may be.

6. **Penalty for contravention of section 4.**—Whoever  knowingly  and  wilfully  makes  any 
declaration  or  statement  specified  under  sub-section  (1)  of  section  4,  which  is  false  in  material 
particulars, or omits to make a material statement, or makes a statement which he does not believe to be 
true, shall be punishable with fine which may extend to fifty thousand rupees or five times the amount 
of the face value of the specified bank notes tendered, whichever is higher. 

7. **Penalty for contravention of section 5.**—Whoever contravenes the provisions of section 5 shall 
be punishable with fine which may extend to ten thousand rupees or five times the amount of the face 
value of the specified bank notes involved in the contravention, whichever is higher. 

8. **Offences  by  companies.**—(1) Where a person committing a contravention or default referred to in 
section 6 or section 7 is a company, every  person  who,  at  the  time  the  contravention  or  default  was 
committed, was in charge of, and was responsible to, the company for the conduct of the business of the 
company, as well as the company, shall be deemed to be guilty of the contravention or default and shall be 
liable to be proceeded against and punished accordingly: 

Provided that nothing contained in this sub-section shall render any such person liable to punishment if 
he proves that the contravention or default was committed without his knowledge or that he had exercised 
all due diligence to prevent the contravention or default. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been 
committed by a company and it is proved that the same was committed with the consent or connivance 
of, or is attributable to any neglect on the part of, any director, manager, secretary, or other officer or 
employee  of  the  company,  such  director,  manager,  secretary,  other  officer  or  employee  shall  also  be 
deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purpose of this section,— 

(a) “a company”  means any body corporate and includes a firm, a trust, a co-operative society 
and other association of individuals; 

(b) “director”, in relation  to  a firm  or  trust,  means  a partner  in  the  firm  or  a  beneficiary  in  the 
trust.

9. **Special provisions relating to offences.**—Notwithstanding anything contained  in section 29 
of the Code of Criminal Procedure, 1973 (2 of 1974), the court of a Magistrate of the First Class or 
the court of a Metropolitan Magistrate may impose a fine, for contravention of the provisions of this 
Act.

10. **Protection of action taken in good faith.**—No suit, prosecution or other legal proceeding shall 
lie against the Government, the Reserve Bank or any of their officers for anything done or intended to 
be done in good faith under this Act. 

11. **Power  to  make  rules.**—(1)  The  Central  Government  may,  by  notification,  make  rules  for  
carrying out the provisions of this Act.

(2) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House 
of Parliament while it is in session for a total period of thirty days which may be comprised in one session 
or in two or more successive sessions, and if, before the expiry of the session immediately following the 
session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or 
both  Houses  agree  that  the  rule  should  not  be  made,  the  rule  shall  thereafter  have  effect  only  in  such 
modified form or be of no effect, as the case may be; so, however, that any such modification or annulment 
shall be without prejudice to the validity of anything previously done under that rule. 

12. **Power to remove difficulties.**—(1) If any difficulty arises in giving effect to the provisions of 
this Act, the Central Government may, by order published in the Official Gazette, make such provisions 
not  inconsistent  with  the  provisions  of this  Act,  as  may  appear to  it  to  be  necessary  or  expedient for 
removing the difficulty: 

Provided that no such order shall be made under this section after the expiry of a period of two years 
from the date of commencement of this Act. 

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each 
House of Parliament. 

13. **Repeal and savings.**—(1) The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 
(Ord. 10 of 2016) is hereby repealed. 

(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall 
be deemed to have been done or taken under the corresponding provisions of this Act.